U.S., Uzbekistan agree on rice sales

Forrest Laws Farm Press Editorial Staff | Mar 22, 2002

U.S. and Uzbekistan officials have signed an agreement that would provide 83,300 metric tons of U.S. rice to the government of Uzbekistan under Title I of the PL 480 program. USDA says the value of the agreement is $20 million.

“This agreement provides an excellent marketing opportunity for U.S. rice farmers and millers who can deliver high-quality rice to impoverished families in Uzbekistan,” said Agriculture Secretary Ann M. Veneman, who signed the agreement with Eliyor Ganiev, minister of foreign economic relations for Uzbekistan.

The signing followed a meeting between Veneman and Uzbekistan President Islom Karimov where they discussed the agricultural situation in that country, one of the Central Asian republics of the former Soviet Union.

The agreement marks the first major movement of rice food aid in the 2002 fiscal year that began last October, and it comes at a time when the U.S. rice industry is in urgent need of export destinations for its record 2001 rice crop, according to the USA Rice Federation.

“This shipment will supply much-needed rice to Uzbekistan, which is experiencing drought conditions that reduced its rice production,” the federation said. “We have been advocating quick movement of food aid allocations this year and will continue to seek opportunity for increased food aid tonnage.”

Prior to the signing, USA Rice officials met with the Uzbekistan Embassy to discuss the rice varieties available on the U.S. market and current pricing and crop conditions. USA Rice said it thought Uzbekistan could tender for rice as early as April.

Earlier, the Houston-based U.S. Rice Producers Association (USRPA) brought a team of three Uzbek representatives to Washington for meetings with USDA officials and Missouri Congresswoman Jo Ann Emerson and to the Missouri Bootheel to visit with rice farmers there.

“They seemed to be very impressed with the rice farming operations they saw in the Bootheel,” said Jim Willis, president of international programs for the U.S. Rice Producers Association who accompanied the team to Washington, southeast Missouri and New York.

Willis said Steve Welker, who has spent time working on agricultural projects in Uzbekistan and works with the USDA Natural Resources Conservation Service (NRCS) in Dexter, Mo., helped USRPA identify the appropriate delegates from Uzbekistan to visit the area.

The team included Asranov Abdivahob of the Uzbek Department of Agricultural Sciences; Turdailiev Kozimjon, head of the ministry of foreign economic relations; and Karimov Bahtiyar, president of an Uzbek food company.

While drought conditions have played a role in Uzbekistan's food shortage, the situation is more complicated than that, according to Willis, who has visited the region in the past.

“Uzbekistan is the site of the fourth largest ecological disaster in the world,” he noted. “Because of the pumping of water for irrigation and other purposes, the Aral Sea is drying up, and they've had problems with chemicals washing into what's left of the sea. We don't believe rice production is in their future.”

The $20 million PL 480 agreement includes the cost of shipping the rice to the closest port to Uzbekistan, a land-locked country. “Uzbekistan is a country that is only 10 years old,” he noted. “They have a non-convertible currency, which causes them problems in paying for shipping costs and imports.”

The Uzbeks do have mineral resources, including gold, and oil and gas. In some years, they are the second or third largest exporter of cotton, which they use for barter arrangements.

“We believe that Uzbekistan could become an important market for U.S. rice in the years ahead,” said Willis. “We hope to expand our presence in Uzbekistan and to show them we are there for the long-term.”

Including the agreement with Uzbekistan, USDA has identified destinations for up to 350,000 metric tons for PL 480 rice. According to USDA's latest estimates, the U.S. rice industry is facing a surplus of 500,000 metric tons in 2002.

“We are now hopeful of getting the PL 480 total up to 500,000 metric tons,” said the USRPA's Willis. “That would be out of a total export forecast of 2.8 million metric tons for the United States.”

Under PL 480, Title I, private firms make sales of U.S. agricultural commodities at competitive U.S. market prices with long-term, low-interest financing provided by USDA.

USDA said proceeds will be used to fund a development plan to increase agricultural production and improve food storage, marketing, transportation and distribution.

Back in the 1970s, the PL 480 program often accounted for 70 percent of U.S. rice shipments, Willis noted. Budget reductions, additionality requirements — PL 480 shipments cannot displace commercial sales — and trade agreements have changed the program's importance to rice farmers.

“We like the program — it has helped a lot of people through the years,” he said. “Some of the past participants, such as Vietnam and India, have become exporters of rice. It's cheaper than dropping bombs on countries that don't like us.”

The program is not without its political considerations — Uzbekistan allowed the United States to use an air base as a staging area for aircraft and troop movements into neighboring Afghanistan.

“The Uzbeks were visibly sympathetic when we took them to Ground Zero in New York,” said Willis. “They told us they were glad we kicked the Taliban out of Afghanistan.”